New Delhi: After nearly five months wait, the Government on Friday approved BP Plc's acquiring of 30 per cent stake in 21 of the planned 23 oil and gas blocks of Reliance Industries Ltd (RIL) for USD 7.2 billion. RIL-BP deal is biggest FDI in India RIL's USD 7.2 billion deal with British giant BP Plc, cleared by the government on Friday, is seen as the biggest foreign direct investment into India. (Agencies)
While stake sale in showpiece KG-D6 gas and discovery area NEC-25 was approved, nod for inconsequential two blocks - one a deep sea area off the Orissa coast and other an onland block in Assam -- will be given by the oil ministry after technical issues like exploration status are sorted out, Oil Minister S Jaipal Reddy told reporters here.
"The Cabinet Committee on Economic Affairs (CCEA) today approved the proposal to grant consent for transfer of 30 per cent participating interest of RIL to BP Exploration (Alpha) Ltd (a unit of Europe's second-largest oil company)," he said after the Cabinet panel made an exception to holding its meeting a day after the Union Cabinet had its regular meet.
CCEA could not meet on Thursday as agenda could not be circulated well in time.
"RIL wanted to transfer interest in 23 blocks. But our ministry recommended only 21 blocks. For technical reasons, we did not recommend two other blocks," he said.
BP will have to furnish a bank guarantee and performance guarantee as per the production sharing contract.
The deal, that may increase to USD 20 billion with future performance payments and investment, will give Reliance access to BP's expertise in deep-water drilling and accelerate development and production at its fields particularly the under-performing eastern offshore KG-D6.
The mega transaction, announced in February, was cleared by the Cabinet Committee on Economic Affairs (CCEA).
RIL-BP's USD 7.2 billion deal is seen as the largest Foreign Direct Investment (FDI) after Japanese pharma major Daiichi Sankyo's buyout of Ranbaxy Laboratories for USD 4.5 billion in 2008.
Even though there are other bigger-size proposals, most of them are yet to materialise. For instance, South Korean group Posco's USD 12 billion investment for a steel plant in Orissa is yet to take off.
Similar is the case with ArcelorMittal's around USD 30 billion investment plans across India.
Another mega transaction worth USD 11 billion was between Vodafone and Hutchison-Essar. However, there was no direct participation of any domestic firm, as the deal was between two foreign firms.
The latest RIL-BP deal, one of the biggest in the Indian energy space, would see Mukesh Ambani firm selling 30 per cent stake in 23 oil and gas blocks to British entity.
"This is the single largest FDI in the history of India," RIL Chairman Mukesh Ambani had said earlier.
Interestingly, Reliance Industries' failed attempt in 2010 to take control of petrochemicals major LyondellBasell, was valued at over USD 14 billion. If the transaction had materialised, it would have been the largest ever by an Indian entity.
Going by estimates, last year alone saw the announcement of over 290 inbound transactions worth over USD 22 billion.
Among them were Vedanta Resources' planned USD 9.6 billion acquisition of a majority stake in Cairn India.
Abbott Laboratories' takeover of health care solutions business of Piramal Healthcare in a USD 3.7 billion deal and Japanese entity JFE Steel Corp's USD 1 billion investment in JSW Steel were among other big transactions.
The NTT DOCOMO-Tata Teleservices joint venture worth USD 2.70 billion also brought in significant FDI inflows into India.
Among the top deals involving Indian entities are USD 10.7-billion Bharti-Zain transaction and Tata's USD 12 billion-buyout of Corus.
Other major transactions involving Indian entities are Hindalco's buyout of Novelis for USD 6 billion and ONGC -Imperial's USD 2.80 billion deal.
New Delhi: After nearly five months wait, the Government on Friday approved BP Plc's acquiring of 30 per cent stake in 21 of the planned 23 oil and gas blocks of Reliance Industries Ltd (RIL) for USD 7.2 billion.
RIL-BP deal is biggest FDI in India
RIL's USD 7.2 billion deal with British giant BP Plc, cleared by the government on Friday, is seen as the biggest foreign direct investment into India.